(Bloomberg) -- Tikehau Capital SCA aims to take advantage of a looming financing crunch in Europe’s real estate markets by raising a new €1 billion ($1.1 billion) fund, the latest sign of how investors are targeting the embattled sector.
The French asset manager is teaming up with real estate firm Altarea SCA to provide alternative financing to address “an anticipated wide liquidity gap,” the companies said Thursday in a statement. The partners are together committing a minimum of €200 million to the fund.
“We believe there is a strong momentum to initiate this strategy today,” Altarea’s Executive Chairman Alain Taravella said in the statement, adding that real estate companies are still adjusting to higher interest rates.
With banks reducing lending to Europe’s wobbly real estate markets, investors are looking to step in to help bridge the gap. Without new financing sources, landlords face pressure to sell properties to pay off loans, a scenario that would further weigh on valuations and trigger a downward spiral.
Read More: Investors Pile Into Property Debt as Banks Bail on Landlords
Despite a growing list of new funds, the fresh cash is just a fraction of the looming shortfall. PGIM Real Estate has estimated that European banks will withdraw as much as €125 billion from property lending, just as about €200 billion in debt matures this year and next.
The new fund from Tikehau and Altarea will invest in asset-backed financing instruments, including so-called whole loans — a hybrid between senior bank credit and mezzanine debt. It will be open to a range of property types that may include office, retail and hospitality, the companies said.
Maxime Laurent-Bellue, Tikehau’s head of tactical strategies, will run the fund.
Paris-based Tikehau was founded in 2004 by Antoine Flamarion and Mathieu Chabran, who had both started their careers at Merrill Lynch.
The company employs 70 people in London and is planning to significantly boost its headcount in the UK capital as it seeks to expand its businesses that span private debt, real estate and private equity, Flamarion said in an interview.
--With assistance from Alexandre Rajbhandari and Jack Sidders.
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